Rule 1.32 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs)

Content of Required Witness Statement in an EC Regulation CVA - Application to convert into Liquidation / Administration


When a Company Voluntary Arrangement has been brought into being by a Court under the EC Regulation on insolvency there must be a way to later convert that CVA into a subsequent insolvency process. Clearly on any Court Application to convert an EC Insolvency CVA to a liquidation or administration there must be legally required content for the Witness Statement to the Court. Insolvency Rule 1.32 contains the legally required content of the Witness Statement that must accompany the Court Application for conversion of the CVA.


The actual wording of insolvency rule 1.32 is shown below in bold.


Chapter 7 - EC Regulation - Conversion of a (Company) Voluntary Arrangement into Winding Up

Insolvency Rules 1986 - Rule 1.32 - Contents of Witness Statement


(1) The [witness statement] shall state— 

(a) that main proceedings have been opened in relation to the company in a member State other than the United Kingdom;

(b) the [belief of the person making the statement] that the conversion of the voluntary arrangement into [winding-up proceedings] would prove to be in the interests of the creditors in the main proceedings;

(c) the opinion of the person making the statement as to whether the company ought to go into voluntary liquidation or be wound up by the court; and

(d) all other matters that, in the opinion of the member State liquidator, would assist the court— 

(i) in deciding whether to make such an order, and

(ii) if the court were to do so, in considering the need for any consequential provision that would be necessary or desirable.

(2) [A witness statement] under this Rule shall be [made] by, or on behalf of, the member State liquidator]


It may be helpful to first define what a "Member State LIquidator" actually is. The definition is found in Rule 13.13 (11) of The Insolvency Rules 1986 as follows,


"Member State LIquidator" means a person falling within the definition of liquidator in Article 2 (b) of the EC Regulation appointed in proceedings to which it applies in a member state other than the United KIngdom".


In turn Article 2 (b) of the EC Regulation provides, "liquidator" shall mean any person or body whose function is to administer or liquidate assets of which the debtor has been divested or to supervise the administration of his affairs. Those persons and bodies are listed in Annex C;


In other words the EC liquidator must prepare a Witness Statement to the Court containing the above information if he wishes to convert a Company Voluntary Arrangement into a subsequent insolvency process.